Shares of Chipotle Mexican Grill, Inc. CMG were heavily shorted during pre-market trading on Wednesday after the company reported an earnings miss.
- BMO Capital analyst Andrew Strelzik reaffirmed a Market Perform rating, while raising the price target to from $1,600 to $1,800.
- Raymond James analyst Brian Vaccaro maintained an Outperform rating, while raising the price target from $1,750 to $1,900.
- Cowen analysts reiterated an Outperform rating, while raising the price target from $1,950 to $2,050.
- Stephens analyst Joshua Long reaffirmed an Overweight rating and price target of $1,760.
Read on for more analyst reactions.
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BMO Capital Markets
- “CMG’s 4Q22 EPS of $8.29 fell $0.62 below consensus as softer comps and restaurant margins more than offset $0.45+ G&A benefit,” Strelzik wrote. “4Q comps slowed sequentially and traffic remained solidly negative,” he analyst.
- Chipotle’s guidance for first-quarter comps came in ahead of consensus “following industry-wide January acceleration supported by weather/Omicron favorability.” The traffic could increase with the company’s “pivot to more operations-focused strategy," he added.
- “While labor costs are running a bit above our prior expectations, the company’s store margin recovery into the 25-26% range seems firmly intact, while a return to positive traffic should dispel bear concerns that overly aggressive menu pricing has hurt its value proposition (our pricing studies support Chipotle’s strong relative value proposition vs. fast casual peers),” Vaccaro said.
- “We are pleased with better than anticipated 4Q & 1Q sales, and view 4Q’s margin noise as contained as the company is not anticipating any price increases in 2023, which we view encouragingly, and remain on track for 27% margin targets at $3M sales volume, Cowen analysts said.
- “From a high level, Chipotle reported a mixed 4Q22 report including softer-than-expected same-store sales and pressured restaurant-level margins that in turn drove lighter-than-expected adj. EPS,” Long wrote.
- “That said, headwinds during the quarter appear unlikely to repeat and top-line momentum has continued into early 1Q23 with guidance for the quarter built around +HSD % trends (suggesting room for upside vs. consensus expectations at +6.4%),” he added.
CMG Price Action: Shares of Chipotle Mexican Grill declined by 4.46% to $1,646.02 in pre-market trading on Wednesday.
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